When capital assets wear out or become obsolete, they are sold, scrapped, traded in, or may be returned at the end of a capital lease.
Disposing of a capital asset requires removing the asset's net book value from the accounting records. This involves removing the original cost and the accumulated depreciation of the asset. Any difference between the proceeds received and the net book value represents a gain or loss on the disposal of capital assets.
PROPRIETARY FUNDS: Gains and losses are recorded in the proprietary funds using account codes
- 08030 - Gain on Disposal of Capital Asset
- 42001 - Loss on Disposal of Capital Asset
NON-PROPRIETARY FUNDS: No losses are recorded and any and all cash proceeds received are recorded in 06980- Surplus Sales. Because of how Banner Fixed Assets works, the cost and accumulated depreciation of the old asset is removed from the investment-in-plant fund and the remaining book value is charged to E1001 - "NIP Change in Fixed Asset" which at year end is closed to fund balance.
Capital assets disposals are entered into the accounting records when Facilities notifies Campus Accounting Services.
For more information pertaining to disposals, please see the procedures manual.